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Latin America Investment News on Viva Tropical

Housing Loans Decline, Signaling a Shrinking Construction Industry

Article Summary:

Housing loans in El Salvador fell 15% last year, a direct reflection of the shrinking construction market in the country. Builders have pinned their hopes on a new preferential interest law and low-interest loans supplied by The Development Bank, but will they help people to acquire housing?

Photo Credit: Revista Summa

Original Article Text From Revista Summa via Google Translate :

Salvadoran Banks Restricted Credit to Build Houses

Last year credit for housing construction remained stagnant. According to a report of the Salvadoran Chamber of Construction Industry (Casalco) from January to November 2011, these loans fell by 15% as the bank only gave $ 113.9 million.

According to executive director Casalco, Ismael Nolasco, the reduction in appropriations is reflected in the few projects that are running.

Some builders have chosen to develop small projects with equity. Nolasco also finds that a disproportionate response and preferred bank lending to housing developments aimed at medium-high segment, because it represents a lower risk.
But not all has been bad. Last year, the sector managed to maintain 24,000 jobs (per month).”That’s good, because they are not declining, but we’re as stuck because no new projects,” said Nolasco.

In addition to purchase home loans have risen over the past two years by an average of 44%. And from January to December 2011, banks provided U.S. $ 242.5 million, representing an increase of 36%.

Builders have higher expectations for this year, which are based on initiatives promoted by the union, as the Preferential Interest Law, an initiative of the guild, which is in the hands of the executive for their respective review. We have great expectations because the law will help people to acquire housing.

The Development Bank, which will take effect officially on January 19 next, is another of the hopes of the industry, it is expected to make available new lines of credit. “The financial offer will be extended,” said Ricardo Vega, director of the Multisectoral Investment Bank (BMI).

In order to revive sales of the sector, the union launched the “House itself, being guaranteed”, through which projects to place some 4,000 housing units available across the country.

Casalco President, Mario Rivera, said the campaign is part of a strategy to boost the housing sector and guide the population in the process of buying and selling.

The campaign is supported by the Social Housing Fund (FSV), an institution that also has high expectations for this year. Fund President said the goal is to place some 6,300 loans worth U.S. $ 103 million, among which more than U.S. $ 50 million will be allocated for new housing.

Link to Original Article:

From Revista Summa

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